nep-afr New Economics Papers
on Africa
Issue of 2015‒10‒17
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Donor’s double talk undermines African agency : Comparative study of civic agency in Burkina Faso and Togo By Kohnert, Dirk
  2. Constitutional Bargaining, Eminent Domain, and the Quality of Contemporary African Institutions: A Test of the Incremental Reform Hypothesis By Roger D. Congleton; Dongwoo Yoo
  3. Civil conflicts in Africa: Climate, economic shocks, nighttime lights and spill-over effects By Achim Ahrens
  4. Remittances and the Brain Drain in Ghana: A Computable General Equilibrium Approach By Isaac Dadson; Ryuta Ray Kato
  5. Managing Societal Performance of Impact Investing: An Action Research Inquiry By Thomas André
  6. Asymmetries, Structural Breaks, and Nonlinear Persistence: Evidence and Implications for Uncovering the Energy-Growth Nexus in Selected African Countries By Njindan Iyke, Bernard
  7. Strategies of the unemployed in South Africa: Does moving allow the unemployed to get ahead? By Amina Ebrahim; Murray Leibbrandt; Ingrid Woolard

  1. By: Kohnert, Dirk
    Abstract: Despite a long-standing controversy about aid-effectiveness in general and the impact of aid-dependency on governance in particular, little is known on the effect of donors policies on civic agency for democratization in aid dependent autocratic regimes. In this study it is argued that the long-term effects of double-talk of donors, who openly promote democracy and freedom but covertly follow overriding hidden interest, are a neglected source of failure of civic protest and democratic revolutions in autocratic regimes. The differing outcome of 'democratic revolutions' in Togo and Burkina Faso – both 'aid darlings' for decades-serves to substantiate this thesis. A systematic and holistic consideration is necessary for an unbiased evaluation of the hidden adverse impact of aid on collective action at the grassroots. Therefore, a rethinking of temporal and disciplinary 'fault lines' in development politics as well as in development studies is essential.
    Keywords: ODA,democratization,civil society,civic agency,aid-darlings,autocratic regimes,Burkina Faso,Togo,Sub-Saharan Africa
    JEL: F35 F54 N47 N97 O21 Z13
    Date: 2015–10
  2. By: Roger D. Congleton (West Virginia University, Department of Economics); Dongwoo Yoo (West Virginia University, Department of Economics)
    Abstract: According to the incremental reform hypothesis, constitutions are rarely adopted whole cloth; thus the starting point, scope for bargaining, and number of reforms, jointly determine the trajectory of constitutional history. We test the relevance of this theory for Africa by analyzing the formation and reform of the independence constitutions negotiated and adopted during the 1950s and early 1960s. We find historical evidence that independence occurred incrementally and that the African countries that experienced the fewest constitutional moments and narrowest domain of bargaining after independence have better contemporary institutions than states that began with less restrictive constitutional rules and experienced more constitutional moments.
    Keywords: Decolonization, Independence, Constitutional Negotiations, Constitutional Bargaining, Post-Colonial Reform, Eminent Domain, Takings, Institutions, Africa
    JEL: O43 O55 K11 N47
    Date: 2015–07
  3. By: Achim Ahrens (Heriot-Watt University)
    Abstract: This study examines the relationship between weather conditions, economic shocks and civil conflicts in Africa. While most studies rely on country-level data sets, this study exploits a panel data set of African first-order administrative units covering 1992-2010. Since sub-national gross domestic product for Africa is either unavailable or of poor quality, nighttime light data from satellites is exploited to predict economic growth at the sub-national level. In addition to IV/GMM estimation, the Lasso estimator is employed in order to generate optimal instruments for economic growth from rainfall and temperature variables. It is demonstrated that the Lasso estimator successfully addresses the challenges arising from non-linearities, heterogeneity across climate regions and weak identification. Furthermore, spatial econometric methods account for conflict spill-overs via political, geographical and ethnic ties. Estimation results provide no evidence that economic growth shocks have a significant causal impact on violence, but prices of capital-intensive commodities seem to be associated with civil conflicts.
    Keywords: Civil conflict; Africa; economic growth; nighttime lights; spatial econometrics; Lasso; many instruments;
    JEL: C23 C26 Q34 D74 C52
    Date: 2015
  4. By: Isaac Dadson (Ghana Statistical Service, Economic Statistics Division, Ghana); Ryuta Ray Kato (International University of Japan)
    Abstract: This paper presents a computable general equilibrium (CGE) framework to numerically examine the impact of remittances and the brain drain on poverty reduction as well as income inequality in Ghana. The generalized framework with the latest Ghanaian input-output table of year 2005 with 59 different production sectors provides the following results: On the impact of remittances, more remittances reduce poverty, and expand the Ghanaian economy. On the impact on income inequality, it depends on who receives more remittances. If the rural (urban) households receive more remittances, then income inequality shrinks (widens). On the impact of the brain drain, it is negative to both poverty reduction and income inequality, even if the externality effect of the brain drain is taken into account. On the overall impact of both remittances and the brain drain in Ghana, income inequality becomes more severe. On the other hand, the overall impact on poverty reduction, it depends on the amount of remittances as well as the sector where the brain drain occurs. As long as the brain drain occurs in either the education or the health sector, then the positive impact of remittances outweighs the negative impact of the brain drain. However, if the brain drain occurs in the public administration sector, then more remittances are needed to offset the negative impact of more brain drain. Furthermore, if the brain drain occurs in all sectors by more than 5 percent, then even a 30 percent increase in remittances to both rural and urban households is not large enough to offset the negative impact of the brain drain, thus, eventuating in the Ghanaian economy being damaged as a whole.
    Keywords: Ghana, Remittance, Brain Drain, Poverty, Income Inequality, ComputableGeneral Equilibrium (CGE) Model, Simulation
    JEL: C68 D58 I32 O15
    Date: 2015–10
  5. By: Thomas André (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS)
    Abstract: Impact investments are emerging as a new asset class of social finance, sometimes driven by multinational enterprises as part of their strategic corporate social responsibility strategy. These investments intend to create positive societal impact beyond a financial return through the development of social enterprises. Scholars have highlighted the conflicting institutional logics that these later hybrid organizations must face when combining social welfare and profitability. Yet we lack in-depth insight into how impact investing funds are building their own accountability and legitimacy, and more specifically how they are responding to their investor’s pressure to manage societal impact. This paper builds on a three year actionresearch program conducted with Schneider Electric, a multinational enterprise specialized in energy management. The company initiated and sponsored an impact investing fund targeting energy access ventures in Sub-Saharan Africa, alongside four Development Finance Institutions. Grounded in neo-institutional and resource dependence theories, the article analyzes the perceptions of the fund’s managers and suggests a pattern of strategic responses. The fund initially conformed to the emerging values and practices of the industry motivated by a search for salient legitimacy. Then they turned to find a compromise when facing operational complexity, and negotiated the increasing number of requirements from their investors. The paper further provides recommendation for social innovation actors in adopting a performance-oriented approach for managing societal value creation.
    Keywords: Multinational Enterprises, Impact Investing, base of the pyramid, Institutional theory, resource dependence theory, action research, case study
    Date: 2015–10–06
  6. By: Njindan Iyke, Bernard
    Abstract: The paper utilizes the nonparametric Triple test, the Bai-Perron test, and the KSS test to examine whether the paths of energy consumption and economic growth for 19 African countries are characterized by asymmetries, structural breaks, and nonlinear persistence over the period 1971-2011. We find evidence of deepness and steepness asymmetry, structural breaks, and nonlinear persistence in energy consumption and economic growth for these countries. The implications of these findings are that: (i) the findings of studies which examine the energy-growth nexus for these countries in linear settings may be doubtful; (ii) forecasts of energy consumption and economic growth which rely on linear models may contain sizeable forecasting errors. We recommend that future research on the energy-growth nexus should attempt to account for these nonlinearities in order to report more efficient estimates.
    Keywords: Asymmetries, Persistence, Energy Consumption, Economic Growth
    JEL: Q43 Q47
    Date: 2015–09–01
  7. By: Amina Ebrahim (PhD student in SALDRU, the School of Economics, University of Cape Town); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Ingrid Woolard (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper examines the survival strategies of the unemployed using the balanced panel of the first three waves of the National Income Dynamics Study. We find that in response to unemployment and almost no unemployment insurance, unemployed individuals look to parents, relatives and friends for economic support. They are more likely to attach themselves to household that have some income through an employed member or in receive of state support. In many cases the unemployed delay setting up their own households while others move back into family households when faced with persistent unemployment. We use a probit model to show that the unemployed who move are more likely to be employed in a successive wave. The effect of moving on employment status remains significant and positive when we take into account household and individual characteristics. Moving allows the unemployed to get ahead.
    Keywords: Unemployment, national income dynamics study, South Africa
    Date: 2015

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